The role of unemployment insurance for the cost of job displacement

This paper provides an exploratory analysis of the role of unemployment insurance in mitigating the earnings losses associated with job displacement, with a focus on the United Kingdom. It starts by presenting new internationally comparable estimates of the earnings losses of job displacement in the UK - both without and with accounting for the earnings-loss replacement provided by unemployment benefits - and compares them with existing estimates for 13 OECD countries based on a harmonised research design. It then proceeds with an examination of the effects of major unemployment insurance reforms in Germany, Hungary, and Portugal on the earnings losses from job displacement, and the extent to which these effects depend on wage-setting institutions in the form of minimum wages and collective bargaining.